Midway explains the question: “How will the video game industry become bigger than the film industry?”Ã‚Â

Midway held its cards quite close at the press conference at Games Convention in Leipzig. The US publisher stated at the very beginning that it would not go into detail of its full lineup of titles, but instead give a broader overview on the topic of changes in interactive entertainment.

Midway’s CEO David Zucker took the stage after a collage of several Midway titles and explained that the company is expecting a growth in the interactive entertainment sector between 11% and 12% in the years to come. Given the current — significantly lower — growth rates of the music and film industries, it would be only a matter of time until the games business will outperform revenues of the film industry.

But why exactly will games become bigger? Zucker built his thesis on three key elements. First, games leverage what movies do well, they avoid what movies don’t do well and they go beyond what movies can do.

According to Zucker’s analysis, only eight games based on licenses sold more than 1 million units to date, those being big licenses such as The Matrix, Lord of the Rings and James Bond to name a few. He believes that many games out there which are based on movies that don’t exceed more than 300 million dollars at box office, actually lose money. The only exceptions according to Zucker are computer animated movies such as Shrek or Finding Nemo. That’s why Midway sticks to licenses in that area, the next one being the release of the game Happy Feet based on the upcoming movie of the same name.

New intellectual properties (IPs) are valuable with regard to the movie industry and can lead to great potentials in the film market. More and more publishers are focusing on creating new IPs because they more and more realize they can sell film rights of big titles exceptionally well. Halo is a prime example of how Microsoft capitalized on the huge potential of the brand in the film industry.

Also, many new IPs are inspired by movies even though they’re not based on them. Zucker mentioned games like Grand Theft Auto having direct similarities to movies like Carlito’s Way or Medal of Honor using many elements of the movie Saving Private Ryan.

The conclusion of this thesis is reflected in Midway’s lineup. The strategy mentioned above led to Midway’s focus on creating new IP which is directly shaped by influences of people from the film business, without being based on an already existing film. Stranglehold being directed by John Woo, Spy Hunter being turned into a film and The Wheelman starring Vin Diesel are all examples of how Midway sees the future of interactive entertainment.

Midway then showed a trailer for the upcoming game The Wheelman which showed a scene where the driver (Vin Diesel) waits outside a club in a car when a man comes bursting through the door with a suitcase in his hand, opening one door of the car and demanding the driver to hit the gas. Being quite the charmer, Vin Diesel asks for the money first, and as some thugs came running after them, gunfire erupts. When a rearview mirror at the side of the car is shot off, Diesel increases the required payment and finally gets all the money he wanted. An incredible car chase follows where motorbikes fly through the air and the car’s roof is chopped off in an explosion that would make any movie director take note.

Action flick type one-liners coupled with humor and insane car chases seems to be the recipe for The Wheelman. Even though the trailer looked very much like CG, comparisons to the game Stranglehold were evident as far as visual style goes. Zucker also explained that Midway’s studios are sharing technology in order to cut down on development costs, something which definitely needed to be done after all the expensive Research & Development that has gone into the first wave of next-generation titles. As a consequence, the engine used for The Wheelman is the same one as the one used in Stranglehold.

The second pillar in Zucker’s speech is the fact that games can actually avoid the problems that the film industry is facing. He mentioned that many successful movies don’t make high profit margins because the increasing salaries, royalties and costs of actors and directors have led to spiraling costs in the film industry. A movie like War of the Worlds which grossed more than 600 million dollar to date is only expected to make small profits because the production and marketing costs were phenomenally high. In contrast, Zucker mentions that this is something that doesn’t apply to games, because games publishers own the characters and brands. He jokingly stated that, for example, Master Chief surely didn’t demand twice the salary for Halo 2 only because the game was successful. The attendees of the press conference chuckled.

Zucker stated some interesting numbers. While in the 8-bit days only 50,000 units sold were required to break even, that number grew to 1 million units in the next-gen era with an average budget of 15 million dollars for each next-gen game. If the game is based on a license, even 1.5 million units would have to be sold to break even.

Midway also sees the future of games in areas where they can go beyond what movies can do. They feature a much higher immersion and give the player a lot more control over the entertainment. Fully interactive worlds lead to high expectations of the players and vice versa. People also want a high level of customization possibilities. Multiplayer also is a big component, both competitive and cooperative. Midway then showed a short snippet of Unreal Tournament 2007, which looked as good as always. The publisher expects elements like communities, MMOs, Xbox Live and Advanced Casual Games to make significant contributions to the form of future multiplayer entertainment. Socializing, making friends and trading will be more important in the games to come.

One example of what Zucker meant with customization was a brief clip he showed of Mortal Kombat: Armageddon where he created a fighter that looked a bit like Zucker himself, before killing various enemies with its trademark brutality.

It seems that Midway is on an interesting path to combine Hollywood talents and make them help create new IPs for the interactive entertainment industry. New IPs mean new content and new ideas, which should be interesting enough for any gamer out there.